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Posts Tagged ‘Digital Platforms’

Data, Platforms and Power

19 February 2019 Leave a comment

We know that digital platforms can be very powerful, but how does their use of data relate to power?

In three ways[1] that derive from the datafication and digitisation affordances of platforms:

  1. Addressing Information Failure. Platforms succeed in part by finding ways to overcome information failures in existing markets. These failures may be sources of power for incumbents. For example, estate agents (realtors) hold power in real estate markets due to information asymmetries; such as knowledge of house sale prices.  Real estate platforms put such data into the public domain, thus undermining the power of incumbents.  Information failures may also be a source of weakness in existing markets.  For example, riders with traditional taxi firms don’t know exactly when their cab will arrive.  Platforms provide such data and so, again, undermine incumbents.

 

  1. Mashing Up. As they deal with digitised data, platforms can gain power by integrating different data streams onto the platform. Real estate platforms integrate online information about neighbourhoods.  Ride-hailing platforms integrate online maps to show cab location and routes to riders and drivers.

 

  1. Controlling New Data. By digitising transactions and associated processes, platforms create, capture and control new data. This bolsters their power; typically by creating new information asymmetries: the platforms know things that others don’t.  Real estate platforms can monitor search behaviours of buyers to understand more about which features of house listings they value most.  Ride-hailing platforms understand spatio-temporal patterns of supply and demand alongside many other behavioural characteristics of riders and drivers.

 

This simple framework can usefully be applied in order to analyse the role of data in platforms, and its contribution to power.

 

[1] Categorisation and examples developed from Drouillard, M. (2017) Addressing voids: how digital start-ups in Kenya create market infrastructure. In: Digital Kenya, B. Ndemo and T. Weiss (eds). London: Palgrave Macmillan, 97–131

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How Many Platform Workers Are There in the Global South?

29 January 2019 Leave a comment

In developing countries, there has been a rapid increase in the gig economy and in the presence of digital labour platforms: defined as “a set of digital resources – including services and content – that enable value-creating interactions between consumers and individual service-providing workers”[1].

But how many workers actually work for such platforms?

I am not going to provide a reliable answer to that question but I will give some kind of ballpark figure.

We start by dividing out two types of platform work: digital gig work that involves digitisable tasks like data entry, writing copy, web design, accounting, etc; and physical gig work that involves a physical task like taxi driving, food delivery, domestic work, etc.  A previous estimate[2], updated to account for growth, would be that there were something like 10 million active digital gig workers in the global South at the start of 2019 (and around ten times that number registered on digital labour platforms but with 90% of them inactive).

So how many physical gig workers are there?  I’m going to break this down by continent since the extent of physical gig work seems to vary significantly between the three main continents of the global South.

Africa

Calculations here are based on extrapolations from just two economies, and seek to take account of wealth and population[3].  Current research for the Fairwork project estimates around 30,000 physical gig workers in South Africa; about half in taxi-driving and the rest mainly in delivery and domestic work.  Estimates for Nigeria[4] plus re-use of some of the same ratios found in South Africa, suggest 20,000 such workers.  Accounting for GDP per capita and population suggests around 60 workers per US$1,000 GDP/capita and per 1 million population; i.e. per US$1bn GDP.  Multiplying up to the overall GDP of Africa produces an estimate of c.130,000 physical gig workers in Africa.  However, given there are at least 100,000 in Egypt alone, we can at least double that to 250,000.

Asia

Similar calculations can be undertaken in Asia, based on numbers associated with platforms in India and Indonesia.  Extrapolating from estimates for taxi-driving and food delivery platforms in India[5], I estimate around 2 million physical gig workers in India.  For Indonesia[6], the figure is closer to 1 million.  Accounting for GDP suggests around 800 workers per US$1bn of GDP.  Multiplying up to the overall GDP of Asia (excluding Japan) produces an estimate of roughly 18 million physical gig workers in developing Asia.

However, there is an alternative approach, which is to exclude China in this calculation, which produces a figure of 9 million, and then take at face value claims that Didi Chuxing employs 21 million physical gig workers in China[7].  This would lead to an estimate of 30 million physical gig workers in developing Asia.

Latin America

Here, I’ve taken a simpler approach based on some national and continent-wide estimates of taxi driving[8] and then re-using ratios from the South Africa work.  This produces an estimate of something like 2 million physical gig workers in Latin America.

Summary

The basis for these estimates is flimsy, and the extrapolations are worse, so please attach a strong health warning to this material.  Better still, come up with some improved statistics.  But my ballpark figure is that there are at least 30 million platform-based gig workers in the global South; 10 million digital and just over 20 million physical.  And that the figure could be more than 40 million, which would be around 1.5% of the global South workforce.

A proportion of these workers are not relying on this as their primary source of income.  For digital gig workers, this number is anything from two-thirds to a half[9].  It may be somewhat less for the physical gig economy, so another ballpark would be that around 15-20 million workers in developing countries are relying on digital platforms for their primary source of income.

(Annual turnover is an issue for another day but, globally and summing figures for the digital gig economy[10] and main physical gig platforms Uber[11] and Didi Chuxing[12], it must be at least US$50bn.)

 

[1] Adapted from Constantinides, P., Henfridsson, O., & Parker, G. G. (2018). Introduction—Platforms and Infrastructures in the Digital Age, Information Systems Research, 29(2), 381-400

[2] Heeks, R. (2017) Decent Work and the Digital Gig Economy, GDI Development Informatics Working Paper no.71, University of Manchester, UK

[3] An alternative approach would seek to extrapolate in terms of numbers of Internet users but that is correlated with GDP, and the figures still point to a strong under-representation of Africa in platform labour and strong over-representation of China.  Put another way, factors other than wealth and Internet access are needed to explain national differences in the proportions working in the platform economy.

[4] E.g. https://www.vanguardngr.com/2018/08/uber-monthly-passenger-base-in-nigeria-hits-267000/ and https://technext.ng/2018/08/17/max-ng-3-5-things-should-know-about-ride-hailing-platform/

[5] E.g. https://qz.com/india/1385653/uber-ola-drivers-pay-the-price-for-indias-fuel-price-rise/ and https://www.livemint.com/Companies/cYbdfsYk93HFhMuC0XgaNN/Swiggy-Zomato-hike-delivery-boy-salaries-as-competition-gro.html and https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/zomato-swiggy-and-ubereats-paying-higher-cash-on-delivery/articleshow/65142563.cms

[6] e.g. http://buscompress.com/uploads/3/4/9/8/34980536/riber_7-s1_sp_h17-051_59-67.pdf and https://www.thejakartapost.com/academia/2018/11/21/the-gig-economy-and-skills-traps-in-indonesia.html

[7] E.g. https://technode.com/2018/03/19/didi-1-5-billion-abs/ and https://www.sustainabletransport.org/archives/6317

[8] E.g. https://www.reuters.com/article/us-uber-brazil/uber-rival-apps-join-forces-in-brazil-to-stem-tide-of-regulation-idUSKBN1D71KE and https://www.ft.com/content/7bf04e08-1d63-11e8-aaca-4574d7dabfb6 and https://www.globalfleet.com/en/smart-mobility/latin-america/news/chile-imposes-regulations-ride-hailing-companies and https://www.forbes.com/sites/jonathanmoed/2018/12/20/is-uber-operating-illegally-in-its-fastest-growing-region/#74c69e161925

[9] Heeks, R. (2017) Decent Work and the Digital Gig Economy, GDI Development Informatics Working Paper no.71, University of Manchester, UK

[10] Heeks, R. (2017) Decent Work and the Digital Gig Economy, GDI Development Informatics Working Paper no.71, University of Manchester, UK

[11] E.g. https://www.cnbc.com/2018/08/15/uber-q2-2018-revenue-bookings-slow-slightly.html

[12] E.g. https://kr-asia.com/losing-300m-in-2017-didi-chuxing-wants-to-turn-a-profit-in-2018-amid-fierce-competition

Crowdfarming: Platform-Enabled Investment in Nigerian Agriculture

20 November 2018 Leave a comment

Crowdfarming is fast becoming the easiest means of investing in agriculture in Nigeria. On one hand, we have smallholder farmers who have agricultural skills and farmland but lack sufficient finance.  On the other hand, there are individuals who have money to invest but lack agricultural skills and access to farmland. Intermediated by digital platforms (Figure 1), crowdfarming entails sourcing funds from several individuals (the crowd) to invest in smallholder agricultural enterprises. In some cases, investors receive returns in the form of agricultural produce, while in other cases returns are financial – that is, investors receive their initial investments plus profits [1].

Figure 1: Snapshot of a Nigerian digital platform-enabled crowdfarming webpage (source: Thrive Agric, 2018)

There are currently at least seven active (indigenous) digital platform-enabled crowdfarming agribusinesses in Nigeria. These are: Thrive Agric, Farmcrowdy, Growcropsonline, Growsel, Farmkart, eFarms and Agropartnerships. Drawing from research carried out with Thrive Agric, it is understood that investors (also called ‘farm subscribers’) are considered part-owners of farms they invest in. The contractual agreement between the crowdfarming platforms and farm subscribers provides details on the returns on investment per farm enterprise, length of the production/investment cycle (e.g. see Figure 1), insurance cover on funds invested, and secure online payments. Farm subscribers also receive regular information on the farm’s progress through email alerts and notification of final payments at the end of the production cycle. Subscribers can also apply to visit the farms they invest in.

In Nigeria, crowdfarming platforms are tapping into a large pool of financial investors who are mostly educated individuals, located in urban areas in Nigeria or in the diaspora. Thrive Agric’s model has attracted over 3500 investors, located in 10 countries (Figure 2), who have invested in nine agricultural value chains, directly supporting the livelihoods of over 12,000 farmers (Figure 3), since its inception in 2017.

Figure 2: Geographic spread of Thrive Agric’s crowdfarming subscribers investing in smallholder agricultural production across Nigeria (source: author’s field research, 2018)

Figure 3: Geographic spread of Nigerian states where crowdsourced funds are invested by Thrive Agric (source: author’s field research, 2018)

Despite its growing recognition as a means of investing in agriculture, some factors still constrain the scaling-out of the crowdfarming model beyond its current scope. These factors include:

  • Low level of awareness and trust issues: according to the Chief Technical Officer of Thrive Agric, not many people are aware of crowdfarming and its benefits to both investors and farmers in Nigeria. As such, there is still the potential for more people to invest but getting the word out there, cost effectively, remains a challenge.
  • Currency and bank transaction issues: currently, investing in Nigeria’s agriculture through crowdfarming can only be carried out in Nigeria’s currency (the Naira) due to fluctuations in foreign exchange rates. As a result, investors are required to have a Naira account to participate in this space.

Looking ahead: what does the future hold for Nigeria’s agricultural growth through crowdfarming?

Investing in Nigerian agriculture has been described as key to driving the growth of the sector and Nigeria’s economy in general [2][3]. However, the growth of Nigeria’s agricultural sector has been constrained by a myriad of factors especially those relating to low financial investments in infrastructure, agricultural research, high yielding inputs and information delivery [4]. As agricultural production in Nigeria is still largely rain-fed, the issue of timely access to finance, ahead of the rainy season, remains a reoccurring constraint to the socio-economic growth of farmers (ibid). Figure 2 shows that digital platforms are breaking down barriers to agricultural investments in Nigeria by bridging the gap between investors (both home- and diaspora-based) and smallholder farmers.

However, there is still a lot to understand in terms of the long-term impact of investing in agriculture through digital platform-enabled models like crowdfarming. Research is also needed to ascertain the nature of interaction between these platform models and the existing institutional forms that govern agricultural value chains. This will help broaden our understanding and the broader implications for the distribution of value among stakeholders along agricultural value chains that are platform-enabled.

References

[1] Flynn, P. (2015) What is Crowdfarming, Hazel Blog http://blog.hazeltechnologies.com/article-27-what-is-crowdfarming

[2] Izuchukwu, O. (2011) Analysis of the contribution of agricultural sector on the Nigerian economic development, World Review of Business Research, 1(1): 91-200

[3] Udoh, E. (2011) An examination of public expenditure, private investment and agricultural sector growth in Nigeria: bounds testing approach, International Journal of Business and Social Science, 2(13): 285-292

[4] Phillip, D., Nkonya, E., Pender, J. and Oni, O.A (2009) Constraints to Increasing Agricultural Productivity in Nigeria: A Review (Vol. 6). International Food Policy Research Institute, Washington, DC

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